Friday, October 21, 2005

the farms are not allright

Agriculture facing its own Katrina via EnergyInvestment
Agriculture today is facing a major catastrophe not experienced since the Dust Bowl days of the Great Depression. Based on expert economic projections, for the first time in decades, many U.S. farmers cannot possibly "cash flow" a crop or crops for the year 2006. Bankers are saying "No." Many of us will not be able to farm this year or the next. The doubling and tripling of fuel and petrochemical prices are the last link in a chain of bad economic events.

These two storms had an impact on the nation's fuel refining capacity, increasing prices beyond an already dismal situation. In agriculture, we cannot pass these prices along as other industries do. Ultimately, it means the numbers don't add up. If we can't show positive cash flow, we won't get our operating loans.

For farmers, a Katrina-like disaster is building. It will soon swamp many family farming operations. Astronomical fuel prices, fertilizer and chemical costs have reached the point that even a modest profit is impossible.

Farmers are receiving the lowest price for commodities that myself or most farmers can remember. Farmers are a proud group, usually not willing to protest. This time, I hope someone is listening. We are literally at the end of the turn row. That's a metaphor for desperation. Agriculture is in serious trouble.

This is the wrong time in history for family farms to be going under. And I would love to know why commodity prices are so low -- bears investigation; is Wal-mart setting the agenda for wheat prices? With worldwide declines in grain production, low commodity prices don't make sense.

More on this later. Something strange here.


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